Top earners are among the big losers from the budget after the chancellor announced he would scrap generous tax breaks on pension contributions for people earning more than £150,000.

Alistair Darling said he wanted to end the anomaly that results in one-quarter of all tax relief going to 1.5% of top earners.

He said people earning more than £150,000 would see the tax relief they enjoy reduced from 40% to the standard rate of 20% following the introduction of a taper in April 2011.

The move will be welcomed by anti-poverty campaigners who argue that wealthy individuals are generously rewarded with tax benefits for making pension contributions compared with most taxpayers.

But the pensions industry, employers and insurers are expected to be dismayed. They will argue that pension schemes and pension savings have already been battered by falling stockmarkets and rising life expectancies, which have increased the costs of providing pensions.